Kenya’s insurance penetration remains relatively low at just under 2.5 percent despite the rising insurance risks and the young population, that is hooked to digital platforms such TikTok, Instagram and X.
APA Life insurance CEO Eric Wanting speaks to Business Daily about the missing link in the race to deepen insurance penetration, filling data gaps to start offering personalised covers that appeal to the young people and the advantages of teaming up with banks.
You have previously served in senior roles at Liberty Africa and Hollard, giving you a view of the African insurance market. What is distinct about the Kenyan market?
For 18 to 19 years, I have been in Pan-African roles, with a lot of focus on Southern African Development Community (SADC).
There is a high cultural acceptance to life insurance in those markets, with the most popular ones being funeral and last expense products.
The Kenyan insurance market is a very well-established market, with some companies dating back almost 100 years.
However, the life insurance market is still quite concentrated. Products like funeral insurance are still mostly concentrated in higher net worth people.
Life insurance as a standalone product is still fairly new in the Kenyan context. The market is dominated by investment products.
However, as the younger generation is getting more exposure to information globally, I think they are starting to see the need and the value in having pure life insurance. But this a process that is going to take time. It is not going to be an immediate switch.
Kenya’s insurance penetration remains relatively low at just under 2.5 percent. What do you see as the strategies in increasing life insurance uptake among underinsured and uninsured populations, especially in rural and informal sectors?
The first thing is that we need to understand the people's needs. We need to move away from a sales approach to a solution space.
It can no longer be a one-size-fits-all approach in terms of making sure that our products are relevant. We need to stop and ask: Does our product meet a customer's need? What feedback are we getting from our intermediaries and our partners? Understanding what the customers’ need is at the core.
Secondly, our products need to be accessible. Kenya is the envy of a number of markets throughout Africa, because mobile money has created a platform for digital distribution.
The use of digital platforms can be a key enabler. But we have a lot to do to create the awareness of that product, even as we load these products into digital platforms.
Further, insurers need to ask: What is the value the customer is going to get out of it? And how does that process works when they need to make a claim? How do they make premium payments?
Our products need to be relevant and accessible. We have got to do a lot that demystifies the benefits of the product and that means a lot of work needs to go into educating our customers on the benefits of not just our products but of the insurance benefit in totality.
Do you feel there is a big gap in the market between what insurers are offering and what customers think is being offered?
Maybe this is a criticism that we need to look at internally. I think we need to be more deliberate in terms of the message we are putting into the market and what we are marketing through different distribution channels.
Are we reaching our customers through the right communication mediums? That is something that, as a strategy, we need to look at.
We have not done enough in making people understand [the value of insurance. We are not growing the market. We're not growing the pie. Now we need to start focusing on growing the pie.
Investments in technologies like artificial intelligence and big data seem to be gaining traction as insurers move to improve underwriting and claims management process. How is APA Life playing in this space?
We are modernising our systems so as to harness the value that data and AI can offer. The second thing is using that system's ability to create value for customers and efficiencies within the business.
We are constantly searching for refined answers to key questions such as: How do we manage our customers better? How do we make sure we are targeting the right customers to offer them the right solution when it comes to using data or using AI in our systems?
We will start seeing increased use of AI for predictive analytics to be able to identify risk areas a lot earlier. The process of modernising our systems is expected to unlock a lot.
As you think about AI, how do you ensure that you still have your hand on the handle as opposed to letting technology take over, given all the biases that may come with it?
This is a question that a number of people are grappling with: What is the role of AI and how is it going to influence business? I think we must be very careful so that we don't run too far ahead in terms of allowing AI to make decisions when the business isn't ready for it.
I think it is going to be an iterative process that we introduce in stages into the business.
At the moment, we should have the first line of checks that can be automated but then still have supervisors as a second line of defence, that can actually go and make sure that we're paying out valid claims.
Software systems and the technology is going to be an entry to the game. But ultimately, it is the people who can use it that will count. That is where our focus is.
We will find our feet as we introduce different kinds of AI efficiencies over time. But there's no doubt it is going to have a profound impact on how we operate.
Banks and insurers are increasingly teeming up to give life to bancassurance. How important is this distribution model for the industry?
I get very passionate when I speak about bancassurance because I think it is the perfect distribution channel for insurance. Banks are the most trusted financial institutions. Insurers are very good at managing risks. When you take the partnership of these two entities and you marry them, the outcome is a very powerful distribution proposition.
This is the reason why the growth in the bancassurance sector has been in the region of about 25 percent as a compound annual growth rate, compared to 11 percent in the insurance sector.
Banks are realising that to build an insurance business on credit life alone is not sustainable; you need to be a full-service insurance intermediary- which means aligning insurance need to all the banking services they offer.
Developing products that speak to the changing needs of people may require quality data, yet many industry players are suffering from massive data gaps. How can the industry go about it?
Data is definitely the new wealth. Unfortunately, given legacy systems—and APA is no different— a number of players in the market have legacy systems.
At APA, we are now recollecting data and rebuilding up our database. We have gone through a process of redesigning our five-year growth strategy and part of that has been the role of data analytics in the future success of the business.
We're already in the process of building our data warehouses and recording the correct data.
A lot of it has to do with going back to our existing customer base, putting human resources in place to contact those customers and expand on the data gaps that we have. We will then back up this process with proxy data. It is a bit of an arduous process but one that will pay tremendous dividends in the future.
